Behind the scenes of Boeing's big tech sale
Boeing early last year was at yet another low point, after it was revealed that part of an Alaska Airlines plane had blown off mid-flight because of missing bolts.
That incident may have been the genesis of Boeing's decision to sell most of its digital aviation business to private equity firm Thoma Bravo for $10.55 billion, which was announced Tuesday.
Behind the scenes: Axios has learned that Thoma Bravo soon after sent a letter to Boeing's CEO and CFO, with whom it had existing relationships, suggesting ways that the debt-laden company could raise capital.
One idea was to sell off profitable tech assets that Boeing had acquired in 2000 (Jeppesen) and 2019 (ForeFlight).
By Q4, Boeing had hired banks and launched an auction.
Zoom in: There were around three dozen bidders in the initial round, including both financial sponsors and strategics.
That got whittled to fewer than 10 bidders in the second round, and then down to four — each of which either was a standalone PE firm or PE consortium.
Final bids were due Monday. Boeing picked Thoma Bravo, which in turn chose private credit over syndicated loans.
The big picture: What's remarkable about the process is that the price is said to have climbed at each stage, despite tariff tumult that's impacted other large mergers and been particularly tough on airlines.
Delta, for example, recently pulled its 2025 guidance, while United issued two different sets — depending on if the U.S. does or doesn't enter a recession.
The buyside thesis seems to be that the number of "tails" will keep climbing, even if travel suffers a near-term decline, and that those new planes will require the sort of tech that Boeing is offloading. Particularly as flight automation accelerates.
Part of this confidence is based on historical growth trends, and part on documented order backlogs.
Plus, private equity has longstanding affinity for carveouts from legacy OEMs like Boeing.
State of play: Boeing shares rose more than 6% at Wednesday's open, on better-than-expected earnings.
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